• The Star Staff

IPA signing bonuses and free subs: Luring labor as a beach economy booms

By Jeanna Smialek and Jim Tankersley

Dogfish Head Craft Brewery is struggling to hire manufacturing workers for its beer factory and staff members for its restaurants in this coastal area, a shortage that has grown so acute that the company has cut dining room hours and is now offering vintage cases of its 120 Minute India pale ale as a signing bonus to new hires.

The company is using its hefty social media presence “to get the bat signal out” and “entice beverage-loving adults” to join the team, Sam Calagione, the company’s founder, said on a steamy afternoon this month at Dogfish’s brewpub, which was already doing brisk business before vacation season.

Economic activity is expected to surge in Delaware and across the country as people who missed 2020 getaways head for vacations and the newly vaccinated spend savings amassed during months at home.

Yet as they race to hire before an expected summertime economic boom, employers are voicing a complaint that is echoing all the way to the White House: They cannot find enough workers to fill their open positions and meet the rising customer demand.

An April labor market report underscored those concerns. Economists expected companies to hire 1 million people, but data released Friday showed that they had added only 266,000, even as vaccines became widely available and state and local economies began springing back to life. Many analysts thought labor shortages might explain the disappointment.

Some blame expanded unemployment benefits, which are giving an extra $300 per week through September, for keeping workers at home and hiring at bay. Republican governors in Arkansas, Montana and South Carolina moved last week to end the additional benefits for unemployed workers in their states, citing companies’ labor struggles.

In tourist spots like Rehoboth Beach, companies face a shortage of seasonal immigrants, a holdover from a ban enacted last year that has since expired.

But the behavior of the area’s businesses, from breweries to the boardwalk, suggests that much of the labor shortage also owes to the simple reality that it is not easy for many businesses simultaneously to go from a standstill to an economic sprint — especially when employers are not sure the new boom will last.

Many managers are unwilling to raise wages and prices enough to keep up, as they worry that demand will ebb in a few months and leave them with permanently higher payroll costs. They are instead resorting to short-term fixes, like cutting hours, instituting sales quotas and offering signing bonuses to get people in the door.

Some employers in the Rehoboth area, which The New York Times visited last year to take the temperature of the labor market, think workers will come flooding back in September, when the more generous unemployment benefits expire.

At least 10 people in and around Rehoboth, managers and workers alike, cited expanded payments as a key driver of the labor shortage, though only two of them personally knew someone who was declining to work to claim the benefit. “Some of them are scared of the coronavirus,” said Alan Bergmann, a resident who said he knew six or seven people who were forgoing work.

Bergmann, 37, was unable to claim benefits successfully because state authorities said he had earned too little in either Delaware or Pennsylvania — where he was living in the months before the pandemic — to qualify.

Whether it is unemployment insurance, lack of child care or fear of infection that is keeping people home, the perception that the job market is hot is at odds with overall labor numbers.

Nationally, payroll employment was down 8.2 million compared with its pre-pandemic level, and unemployment remained elevated at 6.1% in April.

Brittany Resendes, 18, a server at the Thompson Island Brewing Co. in Rehoboth Beach, took unemployment insurance temporarily after being furloughed in March 2020. But she came back to work in June, even though it meant earning less than she would have with the extra $600 top-up available last year.

“I was just ready to get back to work,” she said. “I missed it.”

She has since been promoted to waitress and is now earning more than she would if she were still at home claiming the $300 expanded benefit. She plans to serve until she leaves for the University of Delaware in August, and then return during school breaks.

Scott Kammerer oversees a local hospitality company that includes the brewery where Resendes works, along with restaurants like Matt’s Fish Camp, Bluecoast and Catch 54. He has been able to staff adequately by offering benefits and taking advantage of the fact that he retained some workers since his restaurants did not close fully or for very long during the pandemic.

But he has also bolstered wages. The company’s starting non-tip pay rates have climbed to $12 from $9 two years ago. Kammerer has not been forced to raise prices to cover increasing costs, because business volume has picked up so much — up 40% this year compared with a typical winter — that profits remain solid.

Other employers are struggling more. By the end of April, the Peninsula Golf and Country Club usually hired about 100 seasonal workers over the course of three job fairs. This year, after five fairs, it managed to hire only 40. Missing are the 20 or so students from abroad who would usually work on seasonal visas, but the club also cannot get people to come in for interviews.

Besides relaxing hiring rules and offering bonuses for employee referrals, the club is paying 10% to 20% more, depending on job title. But managers there do not think the wage increases sweeping their region are sustainable, nor do they think pay is what is keeping people from applying.

“There’s no labor out there,” said Greg Tobias, the principal for Ocean Atlantic Companies, a business group that includes real estate development and the country club. “It’s not even a question of, are you paying enough money?”

The sprawling clubhouse restaurant was empty on a sunny afternoon this month as golfers milled about. The company does not have the staff to open it for lunch. It might have to keep the snack shack at the club’s wave pool closed this summer if it cannot find more workers.

Part of the problem, Tobias said, was that people had left the hospitality industry for the thriving local construction business. Ocean Atlantic’s related building company, Schell Brothers, had sales take off over the past year as people moved toward the beach — either because they were retiring or because the pandemic had prompted them to look for more space. Schell Bros.’ subcontractors could not double the sizes of its workforces overnight, and the company was concerned about running out of finished lots. Builders ran into material shortages.

The company first raised prices by 15% to 25% to try to cool things down, but when the building backlog hit 18 months, it instituted caps to slow the rush of sales.

“It’s almost like, anti-capitalistic practices, but what would happen to our companies or employees if we ran out of finished lots would be worse,” said Preston Schell, the co-founder and CEO of Ocean Atlantic Cos.

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